I just had a question come into my inbox and when I think it’s one that everyone should learn from, I post the answer to my blog here. Now, I will not be sharing details about the person or the specific situation but rather just addressing the answer to this question: what sort of billing, payment and agreement setup do you use in your virtual assistance firm Business Services, ETC?
Great, great, great question.
The answer to this question however needs to start with how I propose packages to my clients.
Billing Options for Virtual Assistants
When a client comes to BSETC looking for virtual assistance support, they have two options with my company as it relates to paying us for our services.
- Pre-Paid Packages. With this option, they purchase a 5, 10 or 20 hour block of time (with discounted rates accordingly) and then those hours sit on an account for the client. These hours roll over, month to month, until they are gone. Then, the client replenishes their stock of hours.
- Hourly. For those clients who do not know how much time they want or need, they go on an hourly rate which means I track the time spent on the project and invoice them accordingly twice per month.
Now, let me explain why I use the pre-paid package route and NOT a retainer. I have never offered retainers in my business because I think that in many cases, they do not benefit your client.
Here’s why.
Let’s imagine that you walked into a tanning salon (I know, I know — leaving skin cancer and other morality issues out, this is just an example) and purchased an on-going plan for 5 hours in the tanning salon per month, at a cost of $100 per month, with ZERO option to roll over those unused tanning hours into the next month — regardless of what happens. Then let’s say that you experience a super busy month yourself and you can not get into the tanning salon to use up your tanning hours. The salon says, “Oh, sorry! You’ve lost the time.” $100 gone out the window. How do you feel?
Ripped off would be my answer.
Now, I know there are going to be many, many virtual assistants who disagree with me and that’s okay. I don’t run my business to please other virtual assistants (and you shouldn’t either!) but rather to service the client — the people who purchase the service and who need my flexibility.
Let’s now imagine for a moment the very same tanning salon who appreciates that life happens and stuff comes up. They roll over your tanning appointments if you don’t use them all because they appreciate that some months, you’re going to want MORE tanning appointments AND since you’re getting amazing, flexible and supportive treatment, there’s a good chance you’ll share that adoration with your family and friends.
Which scenario sounds better to you?
I’ll tell you that in the five years I’ve been doing business as a virtual assistant, people still to this day breathe GIANT sighs of relief when I tell them that we maintain a completely flexible payment plan for them. In fact, most people say, “Wow – that is awesome! So many virtual assistants don’t and it’s nerve wracking to know whether I will have a specific amount of work every month for them or not.” This is why entrepreneurs hire virtual assistants — to have flexible, on-going assistance that is also well versed in their business.
If you’re accepting money each and every month for “up to X number of hours” and your clients are not consistently using the hours — where is the money going that they paid you? I think that it’s unfair to receive money that you are not doing work for. Instead, offer them a pre-paid package that they get to replenish as needed and they can keep their hours flexible with you. I promise you, this will build longer term, more satisfied relationships with your clients. Lastly, they won’t ever have to get to a point where they can’t afford you — instead, you’ll grow together as their business grows which is just an amazing feeling.
Agreements for Your Virtual Assistance Business
I’d love to know from the readers of this blog: do you draw up agreements or contracts with each and every single client?
I use my guidance system on this one. If a client is only in need of five-ten hours per month, a contract is not required. If the client needs a lot of support and we have two-three of our team members working on one client’s work and if I relied on that client for their income, a contract is then definitely drawn up.
I like to keep things really simple and while so many virtual assistants believe in doing up massive amounts of paperwork for each and every client, I prefer to use my guidance system, take payment before starting (this is the way I protect myself from not being paid) and then jump right in to actually make a difference in someone’s business.
I find it quicker and keeps the relationship open and mutually exciting. Nothing is worse than getting bogged down in a lot of paperwork when the commitment from the client is not paperwork necessary.
Again, I’m going to have disagreements from those people who firmly believe that paperwork will protect them from all dangers and client wickedness. I’ll tell you, I’ve been doing this for five years and have serviced well over 200 entrepreneurs and only twice did I wish I had a contract. Except, even in those cases, I knew that the move away from that particular client was the best thing possible (and karma takes care of the rest!).
I’ll also tell you that setting your business up with great protection is fabulous but overdoing it where it’s not necessary will just add formalities to a place where you could just be entering into a fabulous, high energy, exciting relationship with your client.
In Your Business
You have to trust your instincts and your guidance system.
Do what feels right for you.
If having mountains of paperwork and signing contracts, etc. makes you feel safer, then by all means do it. I’m just stating what we’ve done and will continue to do because we’ve seen great success doing it this way.
The best part is this: the success we’ve seen is not self-indulgent success. It’s success based on the way our clients feel, how we’ve set our business up to support them and when they walk away from us at the end of the day, they feel like they are getting WAY more value for their money spent. None of that feels wrong to me at all.
(Photo Credits: cleebster on the money photo, photo david on the contract photo and picturejockey for the in your business photo.)
Technorati Tags: Erin Blaskie, The VA Coach, billing, contracts, agreements, virtual assistants, virtual assistant, virtual assistance, VA, value, proposition, money, earn
Erin,
I completely agree with you! It is so great not to have to worry about whether I’ve used up my hours this month! And your system also gives me the chance to add hours in a month if I have an especially busy time with lots going on!
Marilyn
Thanks Marilyn! That’s the beauty of a flexible system. It works for YOU as opposed to you worrying about filling up the time by finding things to do or worse, seeing your money disappear as fluid cash out the window. Not fun!
Thanks for sharing your perspective
Erin
Erin
Thank you for such an informative post – I’ve only ever entered into “per hour” contracts with my clients because I too have always felt that the retainer system is unfair. Because of your generosity in sharing your experience I now have a practical solution to offer, which I’m sure will benefit them!
Sara
Hi Sara!
Excellent! I am so glad that you’ve found this useful
I remember when I was teaching at a private college before starting my business, I always used to say to my students, “If you have a question, there’s a great chance someone else does too!” I am finding the same rings true when I get questions via e-mail.
My new motto is to answer everything via the blog where I can because I see now that it’s helpful for others too
Stop by again!
Erin
Erin,
Thank you so much for that information! I’m trying to start up my business and this are great tips! BTW, I’m loving the Summer Speaker Series 2009. It being a great learning experience for me!! Keep ‘em coming! Have a great Memorial Day weekend (I’m not sure if they celebrate this Holiday in Canada LOL)
Erin,
Excellent post. Not only do I agree with you, but this is how I run my VA business as well. The hourly rate and the pre-paid packages where they have the hours available to them until gone. I realized early on that the retainer package system and the long contract where not only rigid but they were not realistic for working with today’s entrepreneur or small biz owner. The benefit to this system is not only the flexibility for the client but for myself as the VA as well where I’m not feeling guilty that client has paid me for hours not used and that I’m not stressed that I’m taking money from client’s for hours that were not used.
Kimberly LeRiche
JK Virtual Office Resources
Erin,
I so agree with you here, even though I do call it a ‘retainer’ with my clients, I do roll hours over. I never felt right about holding funds for work I didn’t do and charging them more then next month.
I will be updating my terminology and making some slight changes – thanks to your wonderful advice – on how the upfront payments will work. They don’t pay again until they need to replenish hours. I don’t have to worry about, oh he paid for 10 hours and I only worked 6, so I bill him for 6 this time..what a nightmare!
I have recently been giving clients the option of billing every 2 weeks, and not paying upfront and it is working out really, really well!
Thanks so much for you great advice ~ your expertise and knowledge is inspiring!
Nancy Brown
Virtual Gal Friday